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Trai gives pay TV breather

28-September-2004
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Trai gives pay TV breather

Adopting an industry-consumer-friendly approach for broadcasting and cable services, telecom regulator Trai has said there would be no price regulation on pay/premium channels except the limited regulation of 20 per cent as the ‘maximum discount’ on a bouquet of premium channels in the conditional access system (CAS) areas.

It has also recommended an 8 per cent annual licence fee for direct-to-home operations.

In order to promote growth of Internet and broadband in the country and to make DTH services affordable, the authority said, “the annual licence fee of 8 per cent should be applied on adjusted gross revenue.”

According to draft recommendations, the Telecom Regulatory Authority of India has said that for CAS (conditional access system), in areas like Chennai, the existing price regulation would be withdrawn.

For the non-CAS areas, the authority has recommended ceiling rates prevailing on December 26, 2003, plus 5 per cent.

“The ceiling rates at which the charges will be paid by the cable subscribers to cable operators, cable operators to multi-system operators (MSOs) and MSOs to broadcasters, will be those prevailing on December 26, 2003, plus five per cent,” Trai’s draft recommendations said.

The price ceiling would be adjusted downwards proportionately in the event of conversion of pay channels to free-to-air (FTA) or to a premium channel or on discontinuation of a pay channel.

On the issue of pricing of basic service tier, it has been recommended that basic tier services should be fixed by Trai in consultation with the state governments.

“Pending the determination of price as per the above recommendation, Rs 72 per month (excluding taxes) plus 5 per cent will be default rate for CAS areas. For networks deploying traps, additional Rs 5 per subscriber per month will be payable.”

On the issue of the periodicity of revision of rates, the Trai recommended that a notice of one month be given before the prices were changed. With regard to interconnection agreements and revenue-sharing, the authority is of the view that in CAS areas, the revenue-sharing arrangements among the broadcaster, the MSO and the local cable operator, shall take place out of the proceeds of the amount payable by the subscriber.

“The service providers shall mutually negotiate and decide on the revenue arrangements,” Trai said adding where parties were not able to arrive at an agreement within 30 days of initiating such a process, the authority shall issue a regulation.

While in non-CAS areas the ceiling revenue payable by an MSO to broadcaster and a local cable operator to the MSO shall be as that payable as per agreements prevailing on December 26, 2003, plus 5 per cent, Trai said, adding that additional amounts can be charged for new pay channels.

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